Stolt-Nielsen’s chemical tanker earnings will drop, but the company is not confident in saying just how much.
The chemical tanker giant expects its time charter equivalent earnings to fall between 7% and 11% in the fourth quarter, from the $33,355 per day achieved in the third quarter.
But chief executive Udo Lange was evasive on more precise numbers and described the market as becoming more volatile.
“What you have to understand for our business, we have this 90 to 120-days lag,” he said during the third-quarter earnings presentation in Oslo on Wednesday. “That’s why we guided in the way that we did.”
The lag time refers to the period between spot rate movement and when Stolt-Nielsen feels the impact financially, as it fixes ships on a mixture of spot voyages and contract of affreightment (COA) deals.
In the third quarter of 2024, that mix was 52% spot and 48% COA, while it was 55% spot to 45% COA for the same period last year.
“We don’t have a target that says we have to be at this COA rate or this spot rate. That’s really a consequence of how we negotiate and what we think is the right approach in the market,” Lange said.
For the quarter, the tanker segment brought in $456m of Stolt-Nielsen’s $733m in operating revenue. Its operating profit was $107m against the whole company’s $99.2m.
During the quarter, volumes dropped due to the Red Sea security situation, but that was offset by rising rates.
The outlook did not appear to appease investors: Stolt-Nielsen’s Oslo Stock Exchange-listed shares fell NOK 29.50 ($2.79) to NOK 361.50.
DNB’s Jorgen Lian said a “neutral to slight negative” response was warranted, given the tanker sector outlook and that total earnings came in broadly in consensus with analyst expectations.
Fearnleys analyst Fredrik Dybwad expects rates to fall in the fourth quarter before a slight rebound in the first three months of 2025.
